Higher corporate earnings – How can they boost Dubai real estate?
The major reason behind the collapse of Dubai real estate was the lower corporate earnings. The corporations in Dubai witnessed very low profitability in 2008 due to global recession, and as a result, they had no other option then to fire employees and cut short their cost of productions. This unemployment mainly originated from downsizing became the primary reason of oversupply of properties in the UAE.
According to the latest report, overall corporate earnings in the year 2011 have showed tremendous increase as compared to 2010. The UAE economy showed 3.3% growth in the year 2011 but the economy in 2012 is expected to grow by 3.8%. This economic growth is expected to rebound the corporate earnings in Dubai. A sustained growth of the corporate sector is expected through out all the quarters of 2012.
The corporate earnings in the following year are expected to show 23% growth. These higher corporate earnings will encourage businessmen to grow their businesses. The companies will open up new branches and hire new staff for management and operations of their businesses, which will create more jobs in the UAE. The job creation will bring in foreigners looking forward to the best employment opportunities to come and settle over here, which will increase the demand of Dubai properties.
The higher demand is expected to originate which will match with the oversupply to derive again the prices of the properties up. This is how corporate earnings can boost the prices of Dubai rental and available for sale properties. Since unemployment remained the major problem behind Dubai real estate crash, the problem if fixed now can bring good news about real estate recovery soon, otherwise recovery cannot be expected sooner than 2015.
The revenues of the Telecom sector are predicted to grow this year by 6% whereas the banks are likely to report a growth of 26%. Experts are predicting better times ahead as a result of these higher corporate earnings and are desperately waiting for the time when finally there would be something to cheer about Dubai real estate.
